Spend Matters has found an inside source close to the Chinese politburo (one of the rumors circulating in intelligence circles, which is not true mind you, is that we managed to smuggle out a secure red phone and stick it right in the middle of the office). Regardless of our methods, burn after reading ... the following was intercepted and translated by our staff in the past week ...

To: Politburo Members

From: The Big Red Accounting Team

It has recently come to our attention that the world has become keenly aware that China's collective R&D spending is increasing. In fact, one study, according to the anti-people's rag The Wall Street Journal, suggests our R&D spending is expected to increase to $153.7 billion during 2010 (the Year of the Tiger), up from $141.1 billion in 2011 (the Year of the Ox). No word yet on what these forecasting types are estimating our R&D spending will be in the Year of the Rat.

That last point matters much less than what I am about to share with you, fellow committee members. What concerns me is the far greater portion of spending that we have previously discussed as R&D, but now should consider reclassifying into other areas, lest US think tanks, Congressional members and other troublemakers get a hold of our information. We must find new ways of classifying the following categories of spending outside of R&D (even though it will continue to serve our R&D purposes):

US corporate computer access and information sharing -- Even though we continue to successfully connect into the computer systems of top US companies and borrow trade and operating information on a regular basis (even those systems not directly connected to the Internet) from our dear corporate friends, we must find ways of putting this into our intelligence budget rather than R&D.

Technology transfer -- the engineering and related teams we assign to the joint venture companies formed in China with US partners are continuing to have great success in learning from the West. Our new train systems, skyscrapers and even airliners (built with an increasing large percentage of domestic supply components) would not have been possible without this technology transfer. Yet we must find new ways of accounting for the R&D costs of those on the People's payroll who are the heroes in freeing the IP locked in our Western partner companies.

Grid and energy infrastructure -- we have successfully mapped the entire US electricity grid and infrastructure and are prepared to put the entire country into darkness should Western aggressors begin to involve themselves too heavily in our own military and political affairs (e.g., the Taiwan problem). We have also learned from their first grade engineering efforts and are building out our own grid that will be impervious to attack.

College major naming and classification -- Even though we have previously classified (from an accounting perspective) the costs of such college majors as "Internet Defense and Attack Strategies" as R&D for the People's Republic, we can no longer do this. It is also our recommendation to change the name of the major to something more innocuous like "Internet Infrastructure."

State Owned Enterprises (SOE's) -- The term has received too much flak in the West. The terms "Politburo" and "Communism" have quite a negative connotation there. Though our strategy to continue to grow these entities and buy up and into as many Western companies as possible remains intact, our committee recommends a new acronym or brand identify. Our recommendation is TPC, "The People's Company," implying a broader ownership than the 400 person Politburo reality.

Despite the hard work of other fellow committee members who have helped the margins of our companies and have increased our exports to the US, it is no longer acceptable to classify spending that looks at material substitution (e.g., lead, melamine, drywall, etc.) as part of the production process in common items. Even though much of our work in this area has not been discovered (yet) and our people have benefited as a result of these "R&D efforts," it is too touchy a subject to tie to engineering and product innovation. We must now bury this research deep within the "Red Ops" budget...